UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

RANGE RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		001-12209		34-1312571
(State or other jurisdiction of		(Commission		(IRS Employer
incorporation)		File Number)		Identification No.)

777 Main Street, Suite 800
Ft. Worth, Texas		76102
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (817) 870-2601

(Former name or former address, if changed since last report): Not applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

ITEM 2.02 Results of Operations

          On October 25, 2006 Range Resources Corporation issued a press release announcing its third quarter results. A copy of this press release is being furnished as an exhibit to this report on Form 8-K.

ITEM 9.01 Financial Statements and Exhibits

(c)

Exhibits:

99.1

Press Release dated October 25, 2006

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 26, 2006

EXHIBIT INDEX

Exhibit Number		Description
99.1		Press Release dated October 26, 2006

EXHIBIT 99.1

NEWS RELEASE

RANGE REPORTS HIGHER RESULTS ON RECORD PRODUCTION

FORT WORTH, TEXAS, OCTOBER 25, 2006...RANGE RESOURCES CORPORATION (NYSE: RRC) today announced third quarter results. Results were driven by a 19% increase in production volumes. Revenues totaled $228.9 million, a 61% increase over the prior year. Cash flow from operations before changes in working capital, a non-GAAP measure, increased 13% to $114.1 million. Net income jumped 108% to $51.3 million, while diluted earnings per share rose 90% to $0.36. Excluding non-cash hedging gains and non-cash stock compensation expenses, net income would have been $32.2 million or $0.24 per share ($0.23 fully diluted). (See accompanying table for calculation of these non-GAAP measures.)

Range set a quarterly record for its oil and gas production. In addition, production has now increased sequentially for 15 consecutive quarters. Third quarter production increased 19% to 289 Mmcfe per day. Natural gas production jumped 25% to 219 Mmcf per day, while oil and natural gas liquids production rose 3% to 11,744 barrels per day. On an equivalent basis, natural gas represented 76% of the total production.

Commenting on the results, John Pinkerton, Range’s President and CEO, said, “Third quarter results reflect the consistent execution of our strategy. Production reached a record high, extending our string to 15 consecutive quarters of growth. Steady production growth coupled with our low cost structure continues to drive increasing operating cash flow, strong per unit margins and healthy earnings. Looking ahead, we are well on our way to achieving our 15% production growth target for 2006 and have set the same 15% target for 2007. Our confidence is driven by our large inventory of over 8,000 drilling projects, a superb technical team and stability of future cash flow from hedges that cover nearly 70% of 2007 and 2008 gas production at an average floor price of $8.50 per mcf. With the combination of this strong foundation and our emerging plays, which have the potential to more than triple our proved reserves, we are in an excellent position to continue to build per share value.”

Wellhead prices, after adjustment for hedging, averaged $6.49 per mcfe, a 3% increase. The average realized gas price decreased 2% to $6.19 per mcf, as the average realized oil price increased 10% to $46.10 a barrel. While higher production and realized prices, along with the hedging gains, caused revenues to jump 61%, expenses rose only 21%. Operating expenses per mcfe, excluding the effect of non-cash stock expenses under FASB 123R discussed below, increased $0.18 over the prior year and rose $0.08 versus the second quarter rate. The increase was due to higher field service costs ($0.05), higher insurance premiums ($0.04), higher personnel expense ($0.03) and costs associated with integrating the Stroud. Production taxes per mcfe were the same ($0.38) as the prior-year. General and administrative expenses per mcfe, excluding the non-cash stock FASB 123R expense, were held level ($0.31) with the prior year and were $0.04 per mcfe lower than the second quarter. Interest expense increased $0.19 per mcfe over the prior year as a result of the debt assumed in the Stroud acquisition coupled with rising interest rates and a greater proportion of fixed rate debt. Depletion, depreciation and amortization per mcfe increased $0.27 over the prior year to $1.74 per mcfe due to a $0.09 one-time charge to fully impair an offshore property and the higher depletion rate associated with the Stroud properties.

Beginning January 1, 2006, all non-cash expense associated with expensing stock options and SARs per FASB 123R was included in a single line item in the income statement titled “non-cash stock compensation expense.” Beginning with the third quarter of 2006, pursuant to recent accounting interpretations, non-cash expense associated with FASB 123R is recorded in multiple line items including direct operating expense ($378,000), exploration expense ($757,000), G&A expense ($3.9 million) and a

$86,000 reduction of transportation and gathering revenue. The separate line item entitled “non-cash stock compensation expense” now represents the change in value of Range stock held in the Company’s deferred compensation plan. The cumulative effect of these reclassifications are reflected in nine month results.

Income from discontinued operations was a $14.1 million loss. Because GAAP accounting requires that assets held for resale be revalued each quarter based upon commodity prices in effect at quarter-end, a $30.4 million non-cash impairment was recorded in the third quarter reflecting the drop in commodity prices. To the extent that future commodity prices fluctuate, positive or negative impairments will likely be recorded in the future regarding the assets held for resale. Net cash flow from the properties held for resale was $8.0 million during the quarter. Since this cash flow is associated with discontinued operations, it has been excluded from the cash flow from operations amounts reported herein.

Third quarter development and exploration expenditures totaled $180 million, funding the drilling of 281 (194 net) wells and 17 (12 net) recompletions. A 98% success rate was achieved with 277 (190.9 net) wells productive. By quarter end, 188 (118.2 net) of the wells had been placed on production, with the remainder in various stages of completion or waiting on pipeline connection. For the nine months, capital expenditures (excluding acquisitions) totaled $437 million, funding the drilling of 760 (540 net) wells and 59 (47 net) recompletions. The full-year capital expenditures are estimated to total $588 million.

Drilling activity in the third quarter remains high with 37 rigs currently running. During the third quarter, Range continued to expand several of its key drilling areas and emerging plays. In our tight gas sand plays, the Company plans to drill 439 wells, of which 357 had been drilled by September 30. The Company achieved a 99% success rate in this portion of its operations, which is low-cost, low-risk and highly repeatable. Approximately 3,300 tight gas sand wells remain in inventory. In our coal bed methane projects, which now cover roughly 400,000 acres, production has reached roughly 25 Mmcfe per day. In the first nine months, 188 CBM wells were drilled, with approximately 2,700 locations remaining in inventory. Three wells of a 20-well program to test 30-acre downspace drilling in the Nora field of Virginia have been drilled. The remaining 17 locations are expected to be drilled before year-end. If the downspace drilling is successful, the number of undrilled CBM locations could essentially double.

Our shale gas plays now cover in excess of 400,000 acres. In the Fort Worth Basin Barnett Shale play, the Company plans 40 wells in the second half of the year. Since announcing the Stroud acquisition in early May, Barnett production has increased from approximately 16 Mmcfe per day to more than 30 Mmcfe per day currently. In the Devonian Shale play of Pennsylvania, the Company has drilled 14 wells, with several wells yet to be completed to the shale. Six of the vertical wells and one horizontal well are currently on production and reserves appear to be in the range of 600 to 1,000 Mmcf per well. Plans are to have 10 vertical wells and three horizontal wells fraced and on production by year-end.

Production also continues to climb from our field rejuvenation projects. At the West Fuhrman-Mascho field in West Texas we continue to test five-acre infills. To date, six wells have been drilled on five-acre spacing with production rates comparable to the 10-acre wells. If successful, the down spacing program has the potential to double the recovery from this field. At our Eunice field in New Mexico, production has tripled since the June 2005 acquisition to 21 Mmcfe per day. At our Tonkawa project in northern Oklahoma, 58 wells have been drilled to date with encouraging results. Production has risen from essentially zero to 1,000 barrels of oil per day currently. More than 400 drilling locations have been identified on our acreage. Success also continues in our stacked-pay areas that now cover more than 200,000 net acres.

Finally, progress continues with several key exploratory projects. Our 22,000 foot Norphlet test in Mississippi (25% working interest) is expected to reach total depth in December. If successful, full project development could add as much as 150 Mmcfe per day net to Range. Drilling has been completed

on our 12,000 foot Trenton Black River well (50% working interest) in western Pennsylvania. Production casing has been set and testing will begin in the fourth quarter. In the Anadarko basin of southwestern Oklahoma, a deep exploratory well (16% working interest) has been completed to the Springer formation and is expected to be online in November. Another deep Springer well (70% working interest) recently reached total depth of 20,000 feet and completion will commence shortly. Two other deep Springer wells are currently drilling. All of these wells represent high-potential opportunities.

The Company will host a conference call on Thursday, October 26 at 1:00 p.m. ET to review these results. To participate in the call, please dial 877-407-8035 and ask for the Range Resources third quarter financial results conference call. A replay of the call will be available through November 2 at 877-660-6853. The account number is 286 and the conference ID is 217879.

A simultaneous webcast of the call may be accessed over the Internet at www.rangeresources.com or www.vcall.com. To listen, please go to either website in time to register and install any necessary software. The webcast will be archived for replay on the Company’s website for 15 days.

Non-GAAP Financial Measures:

Earnings for third quarter 2006 include ineffective hedging gains and gains related to mark-to-market on derivatives of $55.1 million and a non-cash stock compensation expense of $2.5 million. Excluding such items, income before income taxes would have been $52.3 million, a 13% decrease from the prior year. Adjusting for the after-tax effect of these items, the Company’s earnings would have been $32.2 million or $0.24 per share ($0.23 fully diluted). If similar items were excluded, 2005 earnings would have been $37.8 million or $0.30 per share ($0.29 per diluted share). In 2005, results were impacted by a net $671,000 ineffective hedging loss on commodities and interest and $20.4 million of non-cash stock compensation expense. (See reconciliation of non-GAAP earnings in the accompanying table.) The Company believes results excluding these items are more comparable to estimates provided by security analysts and, therefore, are useful in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.

Cash flow from operations before changes in working capital as defined in this release represents net cash provided by operations before changes in working capital and exploration expense adjusted for certain non-cash stock compensation items. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company’s ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities as an indicator of cash flows, or as a measure of liquidity. A table is included which reconciles net cash provided by operations to cash flow from operations before changes in working capital as used in this release. On its website, the Company provides additional comparative information on prior periods.

RANGE RESOURCES CORPORATION (NYSE: RRC) is an independent oil and gas company operating in the Southwestern, Appalachian and Gulf Coast regions of the United States.

Except for historical information, statements made in this release, including those relating to substantial potential value, future earnings, future growth, new opportunities, future cash flow, capital expenditures and production growth are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management’s assumptions and the Company’s future performance are subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the volatility of oil and gas prices, the costs and results of drilling and operations, the timing of production, mechanical and other inherent risks associated with oil and gas production, weather, the availability of drilling equipment and services at reasonable costs, changes in interest

rates, litigation, uncertainties about reserve estimates and environmental risks. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in the Company’s filings with the Securities and Exchange Commission, which are incorporated by reference.

2006-23

Contacts:						Rodney Waller, Senior Vice President David Amend, IR Manager
				Karen Giles, Sr. IR Specialist
						(817) 870-2601
						www.rangeresources.com

RANGE RESOURCES CORPORATION

STATEMENTS OF INCOME
(Unaudited, in thousands, except per share data)

		Three Months Ended September 30,												Nine Months Ended September 30,
		2006				2005								2006				2005
Revenues
Oil and gas sales		$	172,647			$	142,055							$	506,605			$	368,193
Transportation and gathering			1,120				758								2,246				1,917
Transportation and gathering — non-cash stock compensation (a)			(86	)			(55	)							(237	)			(55	)
Mark-to-market hedging gain			54,950				—								83,734				—
Ineffective hedging gain (loss) (b)			184				(665	)							3,490				(417	)
Other			65				(303	)							(237	)			(204	)
			228,880				141,790				61	%			595,601				369,434				61	%
Expenses
Direct operating			24,406				16,676								63,958				48,903
Direct operating — non-cash stock compensation (a)			378				226								1,029				226
Production and ad valorem taxes			9,985				8,457								28,381				21,246
Exploration			15,755				7,157								32,171				19,536
Exploration — non-cash stock compensation (a)			757				568								2,196				584
General and administrative			8,260				6,916								25,667				19,430
General and administrative — non-cash stock compensation (a)			3,910				2,103								10,347				2,433
Non-cash compensation (c)			(2,638	)			17,450								(347	)			26,793
Interest			16,896				9,910								39,450				28,041
Depletion, depreciation and amortization			46,243				32,900								117,643				93,098
			123,952				102,363				21	%			320,495				260,290				23	%
Income from continuing operations before income taxes			104,928				39,427				166	%			275,106				109,144				152	%
Income taxes
Current			615				331								1,815				331
Deferred			38,899				14,431								101,497				40,484
			39,514				14,762								103,312				40,815
Income from continuing operations			65,414				24,665				165	%			171,794				68,329				151	%
Discontinued operations			(14,084	)			—								(13,519	)			—
Net income		$	51,330			$	24,665				108	%		$	158,275			$	68,329				132	%
Basic
Income from continuing operations		$	0.48			$	0.19				153	%		$	1.30			$	0.56				132	%
Net income		$	0.37			$	0.19				95	%		$	1.20			$	0.56				114	%
Diluted
Income from continuing operations		$	0.46			$	0.19				142	%		$	1.25			$	0.54				132	%
Net income		$	0.36			$	0.19				90	%		$	1.15			$	0.54				113	%
Weighted average shares outstanding, as reported
Basic			136,983				127,404				8	%			132,426				122,954				8	%
Diluted			142,022				132,530				7	%			137,466				127,709				8	%

RANGE RESOURCES CORPORATION

OPERATING HIGHLIGHTS
(Unaudited)

		Three Months Ended September 30,												Nine Months Ended September 30,
		2006				2005								2006				2005
Average Daily Production
Oil (bbl)			8,731				8,650				1	%			8,628				8,170				6	%
Natural gas liquids (bbl)			3,013				2,746				10	%			3,047				2,743				11	%
Gas (mcf)			218,790				175,717				25	%			200,184				169,832				18	%
Equivalents (mcfe) (a)			289,250				244,092				19	%			270,232				235,310				15	%
Prices Realized
Oil (bbl)		$	46.10			$	41.77				10	%		$	46.66			$	38.11				22	%
Natural gas liquids (bbl)		$	39.48			$	27.97				41	%		$	34.88			$	25.26				38	%
Gas (mcf)		$	6.19			$	6.29				-2	%		$	6.73			$	5.70				18	%
Equivalents (mcfe) (a)		$	6.49			$	6.33				3	%		$	6.87			$	5.73				20	%
Operating Costs per mcfe (b)
Field expenses		$	0.86			$	0.68				26	%		$	0.81			$	0.68				19	%
Workovers		$	0.06			$	0.06				0	%		$	0.06			$	0.08				-25	%
Total Operating Costs		$	0.92			$	0.74				24	%		$	0.87			$	0.76				14	%

BALANCE SHEETS
(In thousands)

		September 30,				December 31,
		2006				2005
		(Unaudited)
Assets
Current assets		$	191,664			$	146,300
Current deferred tax asset			2,647				61,677
Assets held for sale			117,275				—
Oil and gas properties			2,546,475				1,741,182
Transportation and field assets			43,862				39,244
Other			149,327				30,582
		$	3,051,250			$	2,018,985
Liabilities and Stockholders’ Equity
Current liabilities		$	201,040			$	158,493
Current asset retirement obligation			3,796				3,166
Current unrealized hedging loss			11,172				160,101
Bank debt			384,700				269,200
Subordinated notes			596,694				346,948
Total long-term debt			981,394				616,148
Deferred taxes			469,612				174,817
Unrealized hedging loss			4,880				70,948
Deferred compensation liability			82,290				73,492
Long-term asset retirement obligation			72,937				64,897
Common stock and retained earnings			1,234,202				860,618
Stock in deferred compensation plan and treasury			(21,939	)			(16,568	)
Other comprehensive loss			11,866				(147,127	)
Total stockholders’ equity			1,224,129				696,923
		$	3,051,250			$	2,018,985

RANGE RESOURCES CORPORATION

CASH FLOWS FROM OPERATIONS
(Unaudited, in thousands)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Net income		$	51,330			$	24,665			$	158,275			$	68,329
Adjustments to reconcile Net income to net cash provided by operations:
Discontinued operations			14,084				—				13,519				—
Loss from equity investment			98				—				61				—
Deferred income tax (benefit)			38,899				14,431				101,497				40,484
Depletion, depreciation and amortization			46,243				32,900				117,643				93,098
Exploration expense			5,568				691				10,314				2,504
Mark-to-market derivative (gain)			(54,950	)			—				(83,734	)			—
Unrealized hedging (gains) losses			(184	)			670				(3,178	)			377
Allowance for bad debts			—				225				33				675
Amortization of deferred issuance costs			409				408				1,221				1,261
Deferred compensation adjustment			2,085				20,453				13,839				30,413
Loss (gain) on sale of assets and other			53				153				976				157
Changes in working capital:
Accounts receivable			(9,509	)			(35,010	)			32,497				(16,954	)
Inventory and other			(49	)			1,195				(1,911	)			(6,879	)
Accounts payable			(12,284	)			20,701				(17,800	)			5,535
Accrued liabilities			3,002				(3,780	)			(878	)			(2	)
Net changes in working capital			(18,840	)			(16,894	)			11,908				(18,300	)
Net cash provided by operations		$	84,795			$	77,702			$	342,374			$	218,998

RECONCILIATION OF CASH FLOWS
(In thousands)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Net cash provided by operations		$	84,795			$	77,702			$	342,374			$	218,998
Net change in working capital			18,840				16,894				(11,908	)			18,300
Exploration expense			10,944				6,483				24,053				17,065
Other			(447	)			(430	)			(3,428	)			(738	)
Cash flow from operations before changes in working capital, non-GAAP measure		$	114,132			$	100,649			$	351,091			$	253,625

ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING

(Unaudited, in thousands)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Basic:
Weighted average shares outstanding			138,318				129,617				133,767				125,156
Stock held by deferred compensation plan			(1,335	)			(2,213	)			(1,341	)			(2,202	)
			136,983				127,404				132,426				122,954
Dilutive:
Weighted average shares outstanding			138,318				129,617				133,767				125,156
Dilutive stock options under treasury method			3,704				2,913				3,699				2,553
			142,022				132,530				137,466				127,709

RANGE RESOURCES CORPORATION

RECONCILIATION OF NET INCOME BEFORE INCOME TAXES
AS REPORTED TO NET INCOME BEFORE INCOME TAXES
EXCLUDING CERTAIN NON-CASH ITEMS
(Unaudited, in thousands, except per share data)

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
		2006				2005								2006				2005
As reported		$	104,928			$	39,427				166	%		$	275,106			$	109,144				152	%
Adjustment for certain non-cash items
(Gain) loss on sale of properties			(93	)			(210	)							155				(226	)
Mark-to-market on hedging (gain)			(54,950	)			—								(83,734	)			—
Ineffective commodity hedging (gain) loss			(184	)			665								(3,490	)			417
Amortization of ineffective interest hedges			—				6								311				(40	)
Transportation and gathering — non-cash stock compensation			86				55								237				55
Direct operating — non-cash stock compensation			378				226								1,029				226
Exploration expenses — non-cash stock compensation			757				568								2,196				584
General & administrative — non-cash stock compensation			3,910				2,103								10,347				2,433
Non-cash compensation expense			(2,638	)			17,450								(347	)			26,793
Equity method investment loss			98				—								61				—
As adjusted			52,292				60,290				-13	%			201,871				139,386				45	%
Income taxes, adjusted
Current			615				331								1,815				331
Deferred			19,476				22,150								74,474				51,708
Net income excluding certain items		$	32,201			$	37,809				-15	%		$	125,582			$	87,347				44	%
Non-GAAP earnings per share
Basic		$	0.24			$	0.30				-20	%		$	0.95			$	0.71				34	%
Diluted		$	0.23			$	0.29				-21	%		$	0.91			$	0.68				34	%

HEDGING POSITION
As of October 25, 2006
(Unaudited)

						Gas								Oil
						Volume				Average				Volume				Average
						Hedged				Hedge				Hedged				Hedge
						(MMBtu/d)				Prices				(Bbl/d)				Prices
4Q 2006		Swaps					10,761			$	6.48				400			$	35.00
4Q 2006		Collars					153,283			$	6.68 - $8.88				6,863			$	39.83 - $49.05
Calendar 2007		Swaps					82,500			$	9.34				—				—
Calendar 2007		Collars					98,500			$	7.13 - $9.99				5,800			$	52.90 - $64.58
Calendar 2008		Swaps					105,000			$	9.42				—				—
Calendar 2008		Collars					55,000			$	7.93 - $11.39				4,000			$	56.89 - $74.78

Note: Details as to the Company’s hedges are posted on its website and are updated periodically.